A new focus on creating shareholder value and curbing capital outlays should help boost the shares of Royal Dutch Shell and Total.

Mounting violence in Iraq has proved the worth of oil stocks as a hedge against geopolitical risks. Oil stocks have gained as most other equities have been racking up losses. This is happening just as some European oil majors are cutting capital expenditures and aiming to boost shareholder returns.

The sector has been propelled upward in tandem with crude-oil prices amid worries...